ADB harnesses Kazakhstan's economic growth to reduce poverty

18/10/2004 |

ADB's program for Kazakhstan will back the Government's medium term priorities in harnessing strong economic growth to benefit the poor.

MANILA, PHILIPPINES (18 October 2004) - ADB's program for Kazakhstan will back the Government's medium term priorities in harnessing strong economic growth to benefit the poor, according to a Country Strategy and Program (CSP) Update for 2005-2007 endorsed by the Board of Directors.

Fueled by the oil sector, the country's gross domestic product grew by an average of 11% during 2000-2002 and 9.2% in 2003. This strong performance is expected to continue with growth of 8-10% over the medium-term.

"Kazakhstan's fast-paced development has led to rapidly evolving development priorities," says Kazuhiko Higuchi, Country Director of ADB's Resident Mission in Kazakhstan.

"The country's strong economic growth has thus underscored the need for inclusive, pro-poor growth."

While the continued economic growth has created new jobs and improved living standards in Kazakhstan, disparities still exist between rural and urban areas. With rural poverty three times as high as in urban areas in some areas, the Government is making efforts to develop rural areas.

The strong growth has also led the Government to look to financing more of its development programs domestically. The Government aims to progressively reduce the budget deficit over the medium term. Therefore, Government borrowing will remain highly selective.

"Substantial oil revenues have increased the domestic resources available to the Government for carrying out its development programs," adds Mr. Higuchi.

"However, the Government will still borrow to gain knowledge on developing sound investment programs and ensuring sound management of public assets from the projects."

ADB's strategy in Kazakhstan focuses on private sector development for inclusive growth, human development, environmentally sustainable development, and regional cooperation.

ADB will propose average annual lending of US$50 million. The nonlending program will continue to be the main instrument for ADB operations in the country, with 13 technical assistance (TA) grants totaling $4.8 million being planned for the next three years.

The proposed lending program for Kazakhstan will focus on projects with strong development impacts or innovative approaches. Among the projects ADB plans during 2005-2007 are:

* A regional rural development project in 2005
* A rural water supply and sanitation project and a stormwater management project in 2006
* A water resources management and land improvement project in 2007.

Lending amounts will be determined mutually between the Government and ADB.

As of end-December 2003, ADB had approved 12 loans for nine projects in Kazakhstan, totaling $501.6 million. Since joining ADB in 1994, ADB has also approved 51 TAs totaling $23.4 million.

CSPs define ADB's medium-term development strategy in agreement with the country. A CSP update is usually prepared every year, taking into account the continued relevance of the CSP, its implementation, and ADB's operational program for the next three years.

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